Securities and Exchange Board of India (Sebi) Decisions
The Sebi board recently implemented several significant decisions, offering clarity on numerous points across different sectors.
Impact on Startups
- Relaxation of rules concerning employee stock ownership plans (Esops).
- Founders and promoters can now hold Esops if granted at least one year before the draft red herring prospectus (DRHP) is filed.
- Mandatory dematerialisation of shares for senior management before DRHP filing.
- Abolition of the one-year lock-in period for shares from compulsorily convertible securities (CCS), facilitating participation in offer for sale (OFS).
- Factoring shares held by foreign venture capital funds, AIFs, and public financial institutions into minimum promoter contributions for IPOs.
Co-Investment Vehicle (CIV) Framework
- Category I and II alternative investment funds (AIFs) can form CIVs to ease additional investments.
- Addresses previous restrictions on portfolio management services (PMS) concerning unlisted companies.
Regulations for Real Estate and Infrastructure Investments
- Units held by related parties in Reits and Invits are not considered "public".
- HoldCos can now adjust standalone negative net distributable cash flows against cash from special-purpose vehicles (SPVs).
- Reduction of minimum allotment for privately placed Invits to ₹25 lakh from ₹1 crore.
Delisting Simplification for Public Sector Undertakings (PSUs)
- Simplified delisting process for PSUs where the government holds at least 90% stake, benefiting about five listed PSUs.
Overall, these changes by Sebi are expected to enhance the attractiveness of the Indian market for listing, improve the environment for AIFs, and simplify delisting for PSUs, especially during times of global financial uncertainty.
